Midterm 2017, questions PDF

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Test 1 Practice Questions M U L T IPL E C H O I C E. C hoose t he on e a lte rn at i v e that best c om p l etes the statement or a nswers t he q u est i on.

Use the figure be low t o a nswer the following quest ion s.

1) If t he price is $4, wh at is t he con sum er su rpl us from t he t hird u ni t of t he good? A) $2 B) $0 C) $3 D) $1

1) E) $4

Use the figure be low t o a nswer the following quest ion .

2) F igur e s ho w s the s up ply c urv e for Piz z a H ou se's piz z as in the left graph a n d t he su pp ly c urv e for Piz z a C lub 's p iz za s in the righ t gr a ph . If the price of a p iz z a is $20, w h at is t he qu antity sup plied b y the market if Piz z a H ouse a n d Pi zz a C lub a re t he only firms? A) 75 B) 50 C) zero D) 25 E) 20

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2)

Use the figure be low t o a nswer the following quest ion .

3) If t he price of a p iz z a is $30, w h at is t he prod ucer su rplus in t he mark e t if Piz z a H ouse a n d Pi zz a Cl ub are the only firm s? A) $2,250 B) $625 C) $500 D) $1,125 E) $25

3)

Use the figure below t o a nswer the f ollowin g quest ions.

4) If t he quantity p rod uced is 100, A) prod uct ion is e fficient. B) marginal social benefit is m ini miz ed. C) dead w e igh t loss is zero. D) marginal social benefit excee ds marginal social cost. E) marginal social cost exceeds marginal social benefit.

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4)

5) W hich of the follo wing can lead to an in e fficient ou tc om e? I. Price re gu l at ions II. In creasing ma rgi nal cost III. M onopoly A) I onl y B) II onl y C) I and III D) III only E) I, II, a n d III

5)

Use the figure below t o a nswer th e following quest ion.

6) F igur e illu strates a lin ear dema nd c urv e. C om p a ring the p rice elasticity w h en price is $2 w i th the price elasticity w h en price is $9, w e can conc l ud e that A) demand is more elastic w hen price is $2. B) demand is elastic w hen price is $9 and unit elast ic w hen price is $2. C) demand is more elastic w hen price is $9. D) demand is inelast ic w hen p rice is $2 and u nit elast ic w hen p rice is $9. E) the price elasticity of deman d is equal w hen price is $9 and w hen price is $2.

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6)

Use the figure below t o a nswer th e following quest ion.

7) G iv en the relat ionship show n in Figur e bet ween total reve nu e from the sale of a goo d a n d the qu antity of the good sol d , the n A) demand for t his good is perf ect ly elastic. B) the price elasticity of deman d is zero. C) the price elasticit y of demand is 1. D) this is a normal good. E) this is an inf e rior good.

7)

8) If the dema n d for good Z is perf ect l y i nelastic, t hen t he demand c urve for goo d Z is A) ini tia ll y u p w a rd slopi ng a n d t hen dow n w a rd sloping. B) u pw a rd slop ing. C) vertical. D) horizontal. E) do w n w a rd sloping.

8)

Use the table below t o a nswer the following q uest ion.

2014 2015 2016 2017

Price of Jol t $1.00/ca n $1.00/ca n $1.00/ca n $1.40/ca n

Price of C ok e $1.00/ ca n $1.40/ ca n $1.40/ ca n $1.40/ ca n

9) T he p rice elasticity of dema n d for J olt A) equals 0.33. B) equals 1. C) equals 3.0. D) equals 2.5. E) ca nnot be ca lcul at ed be ca use income is not consta n t.

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Inc om e Level Jolt Sales $25,000 15,000 cases $25,000 25,000 cases $35,000 15,000 cases $35,000 5,000 cases

9)

10) T he figur e sho w s the dema n d c u rv e for pi zz a. A t w h at price is the price elasticity of dema n d e q u a l to 1? A) $15.00 B) zero C) $10.00 D) $25.00 E) $12.50

10)

11) W h en the price of good A rises from $100 t o $120 a u nit, t he quantity su pp lied increases from 10,000 t o 12,000 units. T he elasticity of su pp ly at a price of $110 a uni t is A) 0.8. B) 1.0. C) 1.25. D) 0.2. E) 0.625.

11)

12) Lux ury goods te nd to have incom e elasticities of dema n d that are A) fir st posit i v e a n d then negat i v e as incom e in creases. B) greater than 1. C) l ess than th e in com e elasticities of deman d for n ecessit i es. D) negati ve. E) gr eater than ze ro bu t less than 1.

12)

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Use the figure below t o a nswer th e following quest ion.

13) A t price P 1 in F igu re A) the equilibri um quantity is Q 2 . B) the equilibri um quantity is Q 4 . C) there is a sh ortage in t he a mou nt of Q 4 - Q 2 . D) there is a su rp lus in t he a mou nt of Q 4 - Q 2 .

13)

E) there is a t endency for t he p rice t o fall .

Use the table below t o a nswer the following q uest ion.

Th e M a rk et for Car - Seat H eaters Price (d oll ars pe r heate r) 40 50 60 70 80 90 100

Q uantity Deman d e d (h eaters per mon t h) 500 450 400 350 300 250 200

Q uantity Su ppl ie d (h eaters per mon t h) 300 350 400 450 500 550 600

14) Su ppose th e cost of prod uction rises a n d su ppl y decrea ses by 100 uni t s at each price. The new equ ilibri um price is $________ a nd equ ilibri um q uantit y is ________ units. A) 50; 350 B) 50; 450 C) 70; 450 D) 70; 350 E) 60; 400

14)

15) Farm land ca n be use d to prod uce either cattle or corn. If the deman d for cattle increases, then the A) su ppl y of c orn decreases. B) demand for c orn increases. C) su pp ly of c orn i ncreases. D) price of corn fa lls. E) demand for c or n decreases.

15)

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Use the information below t o answer the following quest ion. T h e ma rk et for c off ee is ini tia lly in e quilibrium . Pepsi is a s ub stitute for coff ee; cream is a c ompl ement of c off ee. Consid er the mark et for coff ee. Ass um e that a ll ceteris paribus assumptions c ontinue t o hold except for t he even t listed .

16) A technological improv ement low ers the cost of produ c ing coff ee. A t the same tim e, pr eferences for coffee decrease. The equilibriu m quantity of c offee A) increases. B) decreases. C) remains the same. D) increases or decreases depe nding on w h ether the price of coff ee fa ll s or rises. E) increases, decreases, or rema ins the same depe nding on the relat iv e shif ts of the dema nd a nd supply c urv es.

16)

17) T h e dema nd c urv e is P = 800 - 25 Q D . The supply c ur ve is P = 500 + 25Q S. A t mar k et e quilibrium , the equilibriu m quantity is ________ a nd t he equilibrium price is ________. A) 0.17; 25 B) 650; 6.0 C) 1,300; zero D) 25; 0.17 E) 6.0; 650

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18) On a gr a ph of a product ion possibili ties fron tier, op por t uni ty cost is re pr esented by A) a ray t hrough t he origin . B) a poin t on t he vertical a xis. C) the x - axis intercept. D) the slope of t he p rod uction possibili ties frontier . E) a point on t he horizontal a xis.

18)

19) A medical c lini c e mploy s 10 work ers. Each worker can produ ce a ma ximum of either 2 uni ts of medical services or 5 uni ts of a dministrat iv e serv ices a day. O n e day, the clinic dec id es to produce 16 units of medical ser vices a nd 5 units of a dministrative services. T his output level is A) on the c linic 's PPF . B) un atta ina bl e. C) in e fficient. D) atta inable and efficien t. E) efficient.

19)

Use the table below t o a nswer the following q uest ion. Prod u ct ion Possibili ties Possibili t y A B C

Kilograms of Bu tter 8 6 0

S now shoes 0 1 3

20) In moving from combin at ion B t o combination C , t he opportunity cost of producingone additional snowshoe is A) 1/6 k ilogram of butt er . B) 6 k ilograms of butt er . C) 3 k ilograms of butt er . D) 2 k ilograms of butt er . E) 1/2 k ilogram of butt er .

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